Buying a late model used car can be a savvy way to save money on an excellent vehicle, but what if the vehicle that was represented to you as clean or even certified turns out to be a lemon? What if it was previously damaged and the dealer didn’t disclose that? Or what if the dealer added fees to the agreed upon price, falsely advertised a sale, or played fast and loose with the financing?
If any of those things happened to you, you may have a legitimate case for dealer fraud. Before “lawyering up,” you should give the dealer a chance to make it right, but be prepared for disappointment.
In that case, the incident should be reported to whatever agency handles complaints against car dealers in your state. If you want to pursue the matter further and get financial satisfaction, you will need to hire an attorney.
How To Prove Dealer Fraud
Dealer fraud cases can be hard to prove. Laws vary from state to state about what a dealer has to voluntarily disclose. In some states, for instance, unless asked about it specifically by the potential buyer, a dealer does not have to volunteer the fact that a car sustained previous damage in a wreck.
And even if a buyer asks and gets a dishonest answer, it’s the buyer’s word against the dealer. For that reason, it’s not a bad idea to go car shopping with someone else who can act as a witness.
Regardless, it can be very tricky to prove that a dealer intentionally did something fraudulent.
How To Protect Yourself From Dealer Fraud
Fortunately, there are a few things you can do during the buying process to help guard against dealer fraud and avoid purchasing a lemon.
- Any specific car could turn out to be a lemon, but some makes and models are problematic in general. By visiting online forums for the type of car you’re considering, you may be able to learn something helpful. You can also just Google “reliability” of the car brand you’re considering.
- JD Power releases reliability studies that can help disclose potential problems with a certain make or model. It’s no guarantee that a specific car won’t have problems, but you get a general sense of the probable reliability of the brand.
- If you suspect you’re being lied to or if you see the dealer falsely record any of your financial information or details, walk away immediately.
- Check the Buyers Guide sticker on the window. The Federal Trade Commission requires a dealer to display this, and it lets the buyer know what, if any, warranty comes with the vehicle.
- Always run a vehicle history report on any used car you are thinking of purchasing. Unless a vehicle has very recently been in a flood or wrecked and repaired, this information will appear in the vehicle’s history.
- Any used vehicle should be checked out by a mechanic.
- Another option is to take the car to a professional vehicle appraiser. Expert appraisers are good at sniffing out things like paint that’s covering a repair job or welding marks under the hood. Some appraisers specialize in classic cars, which is helpful if you’re in that market.
When and How To Sue for Dealer Fraud
If this advice reaches you too late and you believe you are a victim of dealer fraud, hire a lawyer and then get Auto Mediator on your team. We have over 25 years in the appraisal business, and we offer Pepperdine-trained mediators and expert witnesses in all types of cases involving deceptive dealer practices and fraud. Our years of experience make us an excellent asset to have on your side in a courtroom.
Common Examples of Dealer Fraud to Watch For
Dealer fraud can take many forms, and recognizing these common tactics can help you protect yourself when buying a vehicle. Here are some of the most frequent examples that buyers encounter:
1. Failure to Disclose Vehicle History or Damage
One of the most common frauds involves a dealer knowingly hiding or misrepresenting a vehicle’s past. This might include failing to disclose prior accidents, flood damage, frame repairs, or other significant issues affecting the car’s safety and value. While laws vary by state regarding what must be disclosed, some dealers rely on these gaps to avoid telling the truth. A vehicle might be advertised as “clean” or “certified” when in fact it’s far from it, leaving buyers stuck with lemons.
2. Hidden or Inflated Fees
Dealers sometimes add unexpected fees during the purchasing process that were not part of the initial price negotiation. These can include “documentation fees,” “dealer prep fees,” or other administrative charges the dealer claims are necessary but are often inflated or fabricated. Not only do these catch buyers off guard financially, they can be difficult to contest once signed.
3. Spot Delivery or Yo-Yo Financing Schemes
This deceptive practice involves letting buyers take possession of a vehicle before the financing is fully approved. Dealers then call back the customer to demand higher interest rates, larger down payments, or additional fees to finalize the loan. Many buyers feel pressured and trapped, facing the difficult choice of paying more or returning the car. This tactic can be legally questionable and has led to numerous complaints and legal actions.
4. Odometer Rollback or Misrepresentation
In this fraudulent scheme, a dealer reduces the displayed mileage on a used vehicle to make it appear less used and more valuable. Although federal laws strictly prohibit odometer fraud, some dishonest dealers still attempt it to increase sales price. Misrepresenting mileage can massively affect the vehicle’s reliability, resale value, and maintenance costs.
5. Misleading Warranty or Service Contract Sales
Some dealers aggressively push extended warranties or service contracts that don’t provide the coverage buyers expect. In other cases, they may sell contracts for services the buyer doesn’t need or that were never authorized. Buyers may only discover the limited scope or exclusions after purchasing, leading to costly repairs that aren’t covered.
6. False Advertising and Bait-and-Switch
Dealers occasionally advertise vehicles at very low prices or as part of special promotions that are not available once a buyer visits the dealership. This “bait-and-switch” tactic lures customers in, only to try to sell them a different, often more expensive vehicle. Similarly, the advertised vehicle may have features or trim levels different from what’s actually available.
Understanding these common dealer fraud tactics empowers you to spot red flags early. Always ask detailed questions, request documentation showing the car’s history, review every fee and contract line carefully, and consider independent inspections or appraisals before committing to any deal.
For more guidance on how to handle suspected dealer fraud or if you need professional help resolving a dispute, visit The Auto Mediator’s Fraud page, where expert mediators and appraisers are ready to assist.